Free Market Equilibrium 02 Practice Test - 11th Grade - Commerce
Question 1
Equilibrium:
is a state that can never be achieved in economics
is an important idea for predicting economic changes
is a stable condition
is an unstable condition
SOLUTION
Solution : B
Equilibrium is an important idea for predicting economic changes. Economic equilibrium is defined as the point at which supply equals demand for a product, with the equilibrium price existing where the hypothetical supply and demand curves intersect.
Question 2
A rise in supply and demand in equal proportion will result in:
Increase in equilibrium price and decrease in equilibrium quantity
Decrease in equilibrium price and increase in equilibrium quantity
No change in equilibrium price and increase in equilibrium quantity
Increase in equilibrium price and no change in equilibrium quantity
SOLUTION
Solution : C
A rise in supply and demand in equal proportion will result in no change in equilibrium price and increase in equilibrium quantity, becuase the market forces will balance themselves.
Question 3
The market demand curve shows
the effect on market supply of a change in the demand for a good or service.
the quantity of a good that consumers would like to purchase at different prices.
the marginal cost of producing and selling different quantities of a good.
the effect of advertising expenditures on the market price of a good.
SOLUTION
Solution : B
The market demand curve shows the quantity of a good that consumers would like to purchase at different prices.
Question 4
The market supply curve shows
the effect on market demand of a change in the supply of a good or service
the quantity of a good that firms would offer for sale at different prices
the quantity of a good that consumers would be willing to buy at different prices
All of the above are correct
SOLUTION
Solution : B
The market supply curve shows the quantity of a good that firms would offer for sale at different prices.
Question 5
Market equilibrium refers to a situation in which market price
is high enough to allow firms to earn a fair profit
is low enough for consumers to buy all that they want
is at a level where there is neither a shortage nor a surplus
is just above the intersection of the market supply and demand curves
SOLUTION
Solution : C
Market equilibrium refers to a situation in which market price is at a level where there is neither a shortage nor a surplus.
Question 6
If the price of a good increases while the quantity of the good exchanged on markets increases, then the most likely explanation is that there has been
an increase in demand
a decrease in demand
an increase in supply
a decrease in supply
SOLUTION
Solution : A
If the price of a good increases while the quantity of the good exchanged on markets increases, then the most likely explanation is that there has been an increase in demand.
Question 7
If the price of a good decreases while the quantity of the good exchanged on markets increases, then the most likely explanation is that there has been
an increase in demand
a decrease in demand
an increase in supply
a decrease in supply
SOLUTION
Solution : C
If the price of a good decreases while the quantity of the good exchanged on markets increases, then the most likely explanation is that there has been an increase in supply.
Question 8
If the price of a good increases while the quantity of the good exchanged on markets decreases, then the most likely explanation is that there has been
an increase in demand
a decrease in demand
an increase in supply
a decrease in supply
SOLUTION
Solution : D
If the price of a good increases while the quantity of the good exchanged on markets decreases, then the most likely explanation is that there has been a decrease in supply.
Question 9
An increase in the demand for a good will cause
an increase in equilibrium price and quantity.
a decrease in equilibrium price and quantity
an increase in equilibrium price and a decrease in equilibrium quantity
a decrease in equilibrium price and an increase in equilibrium quantity.
SOLUTION
Solution : A
An increase in the demand for a good will cause an increase in equilibrium price and quantity.
Question 10
In which instance will both the equilibrium price and quantity rise?
When demand and supply increase, but the rise in demand exceeds the rise in supply
When demand and supply increase, but the rise in supply exceeds the rise in demand
When demand and supply decline, but decline in the demand exceeds the decline in supply
When demand and supply decline, but the decline in supply exceeds decline in the demand
SOLUTION
Solution : A
When demand and supply increase, but the rise in demand exceeds the rise in supply.